How Presidential Elections Influence Home Prices: What You Need to Know

With the 2024 Presidential election just around the corner, many prospective homebuyers and sellers are wondering how this significant event might impact the housing market. It's a common concern since buying or selling a home is a major decision, and it's natural to consider how political events might influence the market.

Historically, Presidential elections have had a minimal and temporary impact on the housing market. Let’s explore what typically happens to home sales, prices, and mortgage rates during election years and why you can remain optimistic.

Home Sales

Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.

This hesitation is primarily due to uncertainty, as people prefer to wait until after the election to make significant financial decisions. However, this slowdown is temporary. Historically, home sales rebound in December and continue to rise the following year.

Data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) indicates that after nine of the last 11 Presidential elections, home sales increased the next year.

The data shows annual home sales dating back to 1978, with election years marked in blue. The year following each election is shown in green if home sales rose, and in orange if they declined. Notably, only two years saw a decrease in home sales after an election.

Home Prices

Many people wonder if home prices drop during election years. The answer, generally, is no.

Home prices are robust and tend to rise year-over-year regardless of elections. The latest data from NAR reveals that home prices increased the year following seven of the last eight Presidential elections.

Therefore, you can feel assured that home prices are likely to remain steady or even increase, regardless of the election outcome.

Mortgage Rates

Mortgage rates, which directly impact your monthly home payment, also show interesting trends during election years. Freddie Mac data reveals that mortgage rates decreased from July to November in eight of the last 11 Presidential election years.

Forecasts suggest that mortgage rates will continue to ease slightly for the rest of the year. If these predictions hold true, this year will follow the trend of declining rates leading up to most previous elections. For potential homebuyers, this means the opportunity for lower monthly payments.

What This Means for You

In summary, while Presidential elections do have some impact on the housing market, these effects are usually minor and short-lived. 

For most buyers and sellers, elections do not significantly alter their plans. So, whether you’re looking to buy or sell a home this year, rest assured that the market's resilience means you can proceed with confidence. The upcoming election is unlikely to have a lasting impact on the housing market, allowing you to focus on your real estate goals without undue concern.